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What Is Data Reduction?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 04 December 2014
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Data reduction is a term that applies to the business practice of accumulating, analyzing and ultimately transforming massive amounts of data into a series of summarized reports. The idea behind the data reduction process is to provide a complete though somewhat simplified format that can be utilized with relative ease in business settings. Several different approaches to the process may be used, with the selection of data reduction techniques and systems depending on the nature of the data and how those summary reports need to be structured in order to provide a full and comprehensive representation of that data.

One of the primary tasks in any type of data reduction effort is the organization of all data collected for the purpose. At times this portion of the process focuses on establishing some sort of order to the data that involves prioritizing in a consistent manner, using well-defined criteria to aid in the activity. Depending on the type of data involved, it is not unusual to include some rounding of certain figures in order to make the information easier to work with during the summarizing. Finally, the arrangement of the data into tables, columnar reports, or other types of labeling or formatting may be necessary in order to allow recipients of the reports to follow the logistics of the simplified information with relative ease.

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In times past, the process of going through available data and prioritizing and organizing the information into useful formats was conducted manually. Depending on the amount of data involved and the target audience for that data, the process could take months or even years. Thanks to the creation of software packages today that are designed to deal with data that is in a variety of formats, reports can be prepared in days or weeks. Most types of software can draw information from a number of different databases and help in the sorting process, making it much easier and quicker to prepare simplified data that is both useful and easy to understand.

Using data editing methods to simplify information for presentation into easy-to-read reports is important for businesses of just about any size. The data reduction systems utilized can aid in preparing efficiency and production reports that are helpful to managers, or aid sales forces in better understanding the effectiveness of current campaigns or sales procedures required by the company. Data editing and coding can also prove helpful when it comes to demonstrating to investors the potential associated with the launch of a new product.

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